The group has racked up several billion in litigation and conduct costs since it was rescued by the Government at the height of the financial crisis.

Earlier this year, RBS agreed a £4.2 billion US settlement over claims that it mis-sold toxic mortgage bonds in the run-up to the crisis.

However, it is yet to reach a separate settlement with the Department of Justice (DoJ), which is expected later in the year, although Mr McEwan has warned that there is a chance it could drag on into next year.

If a settlement is reached this year, it is likely to push the bank into a full year loss.

However, Mr McEwan said that once a settlement is reached, it would give the Government an opportunity to look at selling down its holding in the bank.

The chief executive added that he was pleasantly surprised at the resilience of the economy, but warned that an interest rate rise – which the market is expecting – will “have an impact for people with mortgages”.

The bank also said that it is reducing exposure to unsecured consumer lending as concerns continue to mount over a household debt boom.

Shares rose 2% in morning trading to 286p.

RBS, seldom out of the headlines, was warned by Britain’s financial watchdog on Monday that it may still face action over its treatment of small business customers.

Despite dismissing “serious allegations”, the Financial Conduct Authority (FCA) said it was investigating whether there was “any basis for further action” after publishing an interim report into RBS’s Global Restructuring Group (GRG) following intense political pressure.

On Thursday, the bank also paid out $44 million (£33.4 million) to settle a US criminal investigation that accused its traders of lying to customers over bond prices.